Kazakhstan services sector activity declines further in November

Investing.com -- Kazakhstan’s services sector saw a steeper decline in business activity in November, marking the second consecutive month of contraction, according to the latest Freedom Holding Corp. PMI data released Wednesday.

The Freedom Holding Corp. PMI Business Activity Index fell to 48.7 in November from 49.3 in October, moving further below the 50.0 mark that separates growth from contraction. This represents the strongest downturn in 15 months, since August 2024.

Survey respondents attributed the decline primarily to muted new order inflows, with border delays between Kazakhstan and Russia cited as a secondary factor. New business growth continued to cool for the sixth consecutive month, reaching its weakest pace since March.

Employment across the services sector remained broadly stable in November. While companies reduced their workforce for the third straight month, the pace of contraction was minimal, with most survey participants reporting unchanged staffing levels compared to October.

Cost pressures intensified during November, with input prices increasing at the fastest rate in five months. Companies cited higher staff costs, rent, utility expenses, and increased customs rates due to congestion at the Russian border as key factors driving up costs.

In response, service providers continued to raise their prices at a solid pace, extending the streak of monthly price increases to over five years. The rate of output price inflation remained broadly unchanged from October and exceeded the long-run survey average.

Despite current challenges, business confidence improved to its highest level since August, with companies expressing hope for improved demand conditions. However, sentiment remained historically subdued due to concerns about upcoming VAT changes.

The broader Kazakhstan Composite PMI Output Index, which includes both services and manufacturing, rose slightly to 48.7 in November from 48.1 in October, but still indicated a third consecutive month of private sector contraction.

"November saw another fall in overall business activity in the services sector, following the unusually strong optimism observed for much of the year. This may indicate the emergence of systemic problems in the industry," said Yerlan Abdikarimov, Director of Financial Analysis Department at Freedom Finance Global PLC.

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